Government’s effort to bring in wage earners’ remittances through formal channels is facing challenges due to poor financial access and lack of education, the concerned stakeholders said on Thursday.

The inconvertible nature of capital account and lack of proper mechanism to record the net migrant workers abroad are other challenges in determining the exact amount of money that Nepali migrant workers normally remit to their homes.

The government officials, bankers and lawmakers had particularly observed the migrant workers and remittance scenario in South Korea and Dubai where an unknown share of remittances are transferred through informal channels and intermediaries.

Since these informal channels are generally perceived to be less secure, sensitive to misuse for illegal purposes, and less beneficial to the country’s economic development, the central banks and other authorities have been expressing concerns over the use of informal channels to remit funds.

“Due to poor banking access, many migrant workers have been relying on the informal channels to send their earnings home,” Nepal Rastra Bank (NRB) deputy governor Chintamani Siwakoti told the Parliamentary Finance Committee on Thursday. “Hence, NRB is making the bank accounts mandatory for the migrant workers.”

As per NRB statistics, the country received remittance totaling Rs623 billion in the first 11 months of the current fiscal year. The figures stood at Rs665 billion and Rs617 billion in 2015-16 and 2014-15 respectively.

However, only 70-80 percent of the total amount is being sent through formal channels, according to the NRB. The country received rest of the amount through informal channels, popularly known as Hundi.

Remittance from South Korea accounts for 0.84 percent of the country’s total remittance amount. The Korean government has not so far allowed the Nepali remittance companies and banks to set network there.

Siwakoti said the government has also been facing challenges to formalise remittance inflow from Dubai.

“Most of the migrant workers prefer purchasing gold and other goods rather than remitting money from Dubai.”

The government has allowed 110 countries where Nepalis can work. There are 1,033 licenced recruiting firms and 40 companies working as fund transfer managers abroad.

Global IME Chairman Chandra Dhakal said they were thinking of expanding money transfer business in South Korea. The South Korean government has recently introduced a law, allowing foreign companies to open remittance services. Dhakal urged the government to make it mandatory for migrant workers to open bank account under the Employment Permit Service (EPS).

Lawmaker Kedar Prasad Sanjel said that the NRB should take initiatives to open up the financial access in those countries that have not yet permitted the money transfer services to facilitate the migrant workers.

Former finance minister Ram Sharan Mahat said the government needed to develop a mechanism to channelise the remitted money in the productive sectors. According to him, 27 percent of the money that the migrant workers bring home is deposited in the banks and financial institutions.